Plz tell me the Difference between Exemption and Deduction in Detail..!
It is said that Exemption can never exceed Taxable income but Deduction can exceed..!
How.?
Plz reply anyone..
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Difference between Exemption and Deduction.?
Replies (11)
deductions--investment oriented [i.e. if u invest u get it] for eg 80C u invested 2 lac in nsc & ur GTI =80000 then also u r eligible for ded=min(gti or 1 lac) therefore here ur ded eligibile=1 lac but since ur ded can't exceed gti therefore ded=gti.
but in case of exemption [specified by law like minor=10(15)=rs. 1500/minor child eg if minor earns earns IOS=26000 his parents wil be taxable==1200-1500=0 so exemption can exceed respective head's income but can't exceed total taxable income (gti)
any doubt ask further
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Exemption |
Deduction |
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Every income of the assessee is charged to tax unless specifically exempted under the Act. Sec. 10 (or 10A, 10AA, 10B)provides list of incomes which are not to be included in the total income of the assessee for tax purpose. In other words, these incomes are out of the purview of income tax and for tax purpose, total income is computed without taking these incomes into consideration. |
From the gross total income of the assessee, deductions are allowed on fulfillment of conditions as prescribed in the various sections of chapter VIA. Chapter VIA of the Act (comprises of sections 80C to 80U) provides for various deductions from gross total income. Apart from deduction under chapter VIA, several sections of the Act also provide for deduction while computing income under each head of income E.g. Sec. 16(i) allows Standard Deduction to compute income under the head “Salaries”, sec 24(a) standard deduction @ 30%. |
exemptions means the income which is not taxable ...ie. exempted...chod diya gaya hai......for income tax calculations not to be considered...eg-sec 10
deductions means the income is taxable but due to certain provisions the taxability has been reduced...ie. decreased...eg the 80s
| Originally posted by : Sneha.... sunshine | ||
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exemptions means the income which is not taxable ...ie. exempted...chod diya gaya hai......for income tax calculations not to be considered...eg-sec 10 deductions means the income is taxable but due to certain provisions the taxability has been reduced...ie. decreased...eg the 80s |
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| Originally posted by : Sneha.... sunshine | ||
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exemptions means the income which is not taxable ...ie. exempted...chod diya gaya hai......for income tax calculations not to be considered...eg-sec 10 deductions means the income is taxable but due to certain provisions the taxability has been reduced...ie. decreased...eg the 80s |
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| Originally posted by : Sneha.... sunshine | ||
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exemptions means the income which is not taxable ...ie. exempted...chod diya gaya hai......for income tax calculations not to be considered...eg-sec 10 deductions means the income is taxable but due to certain provisions the taxability has been reduced...ie. decreased...eg the 80s |
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and further
deductions first includes in gross total income then allowed under specific provisions
but exemptions even not includible in gross total income of an assessee....
eg:- divident is exempt so it is not required to add it in GTI
Thanks to all of you. You all have explained very well.
agree with snehu......
agree with all.........................
Exemption: It means that the Income is exempt from tax and shall not form part of Gross Total Income..
Deduction: The Income will form part of GTI, but deduction can be claimed under Chapter VI A
ankur, i agree but on exemption and deduction,but how it is first included in GTI is my question.Is tution fees paid us 80C is included in income??
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